From icon of American muscle to symbol of China’s growing wealth and industrial might, Hummer will remain a polarizing brand, praised by a small but avidly loyal cadre of buyers and reviled by others who see it as the ultimate in excess.
Last week’s agreement to sell the General Motors division to Sichuan Tengzhong Heavy Industrial Machinery Co. won’t do much to satisfy those who had hoped GM would simply pull the plug on the brand. But then again, with oil prices rising once more, it’s uncertain Hummer’s new Chinese masters will be able to revive a marquee born in the wake of America’s heady victory in the first Gulf War.
Indeed, with pump prices again nudging the $3-a-gallon mark in places like California and Michigan, it’s anybody’s guess what will happen to light truck sales, and SUVs, in particular.
“There’s a natural SUV market,” notably among those who need cargo and passenger-hauling capacity, or who hit serious off-road trails, said Jim Hall, automotive analyst with the suburban Detroit consulting firm 2953 Analytics. But the segment is “in the middle of some big changes.” Sales are certain to decline, he added, “but nobody knows by how much.”
From a 2003 peak of 2.84 million SUVs, volume fell to just 1.26 million last year, and sales continued declining during the first five months of 2009, according to data from J.D. Power and Associates. The numbers actually are a bit misleading, considering the sharp slump in car sales that began during the second half of last year. Perhaps more telling is the fact that the SUV’s share of the overall U.S. market has plunged from 17.1 percent in 2003 to just 7.8 percent for the current year-to-date.
And that’s actually after a bit of a recovery from the days when gasoline was going for $4 a gallon, in mid-2008.
Sport-utility vehicle transformations
Fuel prices are, without question, one of the biggest factors working against the SUV, but Hall and other analysts contend that there are other dynamics at work. Social pressures, for one, suggested Jeff Schuster, J.D. Power’s executive director of forecasting. In the boom years of the '90s through the first half of this decade, sport utility vehicles were the suburban symbol of affluence. Not anymore.
SUVs trigger an almost Pavlovian negative response from many folks, said Schuster, while Hummer, in particular, “has become the poster child of the unenvironmentally friendly vehicle. That will be difficult to overcome.”
“That’s the age-old dilemma,” said Jim Taylor, the general manager of Hummer. “Your strengths become your weaknesses.”
Once the sale to Sichuan Tengzhong Heavy Industrial Machinery is completed, Taylor said, Hummer executives will consider whether it’s time to soften the hard edges of vehicles like the massive H2 and launch a version of the compact H4 concept vehicle.
At other brands, high-profile SUVs are going through even more dramatic transformations. The Ford Explorer arguably touched off the SUV boom when it was first launched nearly two decades ago. But the next-generation model will drop its heavy truck-based platform in favor of a lighter, nimbler and more fuel-efficient passenger car-based “architecture.” Several other models have traveled this route, including the Mercedes-Benz M-Class.
So-called crossover-utility vehicles, or CUVs, have gained significant momentum in the last couple years. While they sacrifice some off-road capabilities, explained Hall, that doesn’t matter to the typical buyer, who is more likely to want all-wheel drive to navigate snowy suburban streets rather than California's Rubicon Trail. On the whole, crossovers deliver better handling and, in many cases, far better fuel economy than their “two-box” shapes might suggest.
Upcoming advertising for the completely redesigned 2010 Chevrolet Equinox, for example, will heavily promote its 32 mpg highway rating — with the base inline, four-cylinder engine. “We’ll be in the sweet spot if fuel prices keep rising,” said program chief Bob Reuter.
Higher fuel economy standards
Industry observers warn it will be difficult to keep crossovers such as Equinox — never mind traditional SUVs — in the line-up as the result of the Obama administration’s recent move to raise the Corporate Average Fuel Economy standard to 35.5 mpg by 2016.
Further downsizing may be essential, which could drive full-size SUVs like the Ford Expedition, Mercedes GL and Cadillac Escalade off the road entirely. Already, a number of manufacturers have begun paring back SUV projects.
New technology will be needed for both SUVs and CUVs. This could include the expanded use of lighter-weight materials such as aluminum, magnesium or composites, as well as hybrid-electric powertrains. All are costly, and in light of today’s slumping market, it’s difficult for makers to readily throw money at the problem. Less sophisticated — and lower-priced — systems also could help, such as stop/start engines that briefly shut down at a stoplight, then automatically restart when the driver’s foot lifts off the brake.
“There’s no silver bullet, single-shot solution that will get us there,” Reuter cautioned.
But few expect demand for either SUVs or CUVs to vanish. Traditional SUVs will likely continue to see their demand decline, said Power’s Schuster, but Americans aren’t about to give up on the flexibility they’ve come to love. It will be up to the industry, domestic or foreign, to find a way to keep the supply of SUVs flowing to U.S. showrooms.
Paul A. Eisenstein is a veteran auto writer whose work appears in a variety of media outlets, including his personal Web site, TheDetroitBureau.com.
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